Three Research Strategies for the Market Economy

CASE ANALYSIS: RESEARCH STRATEGY AND BUSINESS OBJECTIVES

If all companies in the United States (and, for that matter, in the rest of the world) followed one of the three research strategies described in this case, precious little research would ever be performed in a market economy. The first strategy, that of company Able posits a high risk approach of selecting one probable marketable concept from among those produced by pure research activities in universities, and devoting significant research effort to that concept.

This strategy is high risk for three reasons. First, not all concepts emanating from university research laboratories are amenable to market application development. If such a selection is not amenable to market application development, the company has no other ongoing research projects to provide new products. Second, the strategic policy of pouring all of a firm's research funds into a single project until a product is either on the market, or until it is determined that the concept is not amenable to market application development effectively limits a firm's research efforts to the attempted development of one new concept every decade or two. In such a circumstance, a failure to successfully exploit a selected concept leaves a firm totally reliant on products produced from research that is, at a minimum, ten years old. Third, company Able performs no primary research on its own. It relies entirely on pure research concepts emanating from unive

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research strategy of company Baker has two goals. First, company Baker research seeks to develop products based on pure research that fulfill the firm's criteria for product developmenta medically superior item that will likely become a new "standard," an item likely to have a broadbased effect in health care, and an item that will likely have a long useful life. For items developed through company Baker's research efforts that do not fulfill these three criteria, there is a second goal of the firm's research strategythe development of marketable items that may be licensed to other firms for further product development and marketing. The research strategy of company Baker is much less a high risk strategy than is the research strategy of Able company. Further, the company Baker research strategy holds the potential to provide far greater benefits to the society as a whole than does the research strategy of company Able. The strategy remains heavily dependent, however, on the pure research efforts of universities. There is never any guarantee that universities will conduct research in the areas most exploitable by pharmaceutical manufacturers. In effect, company Charlie conducts no research activities at all. The firm se

Category: Economics - T